Smart appliances. Check. Smart cars. Check. Smart homes. Check. Smart cities. Rewind. Smart factories. Stop!
The Internet of Things (IoT) has been in the news for its hype value. Your alarm clock communicating with your coffee machine to have hot coffee ready for you when you step into the kitchen. Your refrigerator communicating your grocery needs to the local grocer. Your mobile-controlled thermostat, your fitness trackers, drone cameras…yes, even Uber cabs!
All great stuff. But let’s look a little deeper. IoT is much, much more. It’s critical to business! And that is where it is going to be a true game changer. As GE CEO Jeff Immelt cautioned participants at the recent Minds + Machines summit, “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”
The picture starts to get real dramatic when you take a long hard look at the impact IoT can and will have at our workplaces – what’s known as the “Industrial Internet” or “Enterprise IoT”. “This is where the Industrial Revolution meets the Internet Revolution” states Richard Mark Soley, Executive Director of the Industrial Internet Consortium. According to McKinsey, business-to-business applications will account for nearly 70 percent of the value from IoT in the next 10 years – that’s nearly $5 trillion of an estimated economic value of $11.1 trillion a year!
Imagine our factories within this new landscape. What do you see? Sensors, Artificial Intelligence, Robotics, Computer simulation, high speed networks? For sure. But look again – beyond the glitz of new technology. Look at it with the lens of business value. Do you see reduction in costs? Better efficiency? Optimal resource utilization? Real-time analytics? Increased market reach? Greater product customization? All of the above? Yes. That is where the real thrill lies. And it’s real!
According to a recent study by Business Insider Intelligence, the spend on enterprise IoT products and services will grow to $255 billion a year by 2019 – that’s a compounded annual growth rate of 40%! Clearly, this level of interest is not because this is a phenomenal advancement in technology per se. It is because it promises a phenomenal advancement in business.
Businesses are quickly recognizing that IoT might be the key to remaining competitive. This is why I am very excited as I head to the IoT Solutions Congress at Barcelona this week. With over 120 experts coming together, I am looking forward to some valuable brainstorming and insights on the real business impact to be found at the crossroads of IoT and industry.
IoT is definitely the big promise of the future. And we’ll be getting some exciting previews in testbeds set up at the Congress. But what interests me even more is the manner in which IoT is already being used today as a new spark in business right now. For instance, the Engine Health Management being used by Rolls Royce to track the health of thousands of engines operating worldwide, using onboard sensors and live satellite feeds. These send real-time data on the engine’s function back to monitoring stations on the ground, which can be used to detect malfunctions before they become catastrophic.
As author-researcher Joe McKendrick points out, it’s time to “teach old machines new tricks.” This is even more essential as organizations transform into 21 century enterprises (you can read more about a true 21st century enterprise here) which will be built on outcome-based models and ecosystems to create the experience that customers are seeking. IoT will play a key role here as an enabler of both these pillars:
The ‘outcome economy’: It will give us a stronger grip on the results of business processes as we increasingly automate the physical world through technology. This will place a growing emphasis on end products and the outcomes of business activities.
Connected ecosystems: Successful IoT implementation will create a new level of partnerships that may not have been consider a strategic fit today as companies and industries that currently operate in isolation redraw boundaries to form an ecosystem to collaborate and provide the desired customer experience. The prevalence of data sharing will enable software platforms to draw insights and identify parallel lines between businesses that never even realized they were connected.
Now that we have reached a point where IoT in business is more a matter of ‘when’ than ‘if’, the most important question for us as catalysts of change is: What’s the ROI on IoT and how do we measure it?
This is the crucial bridge that businesses need to cross over from today to tomorrow. At HCL, we are helping clients look at IoT from this viewpoint in a very personal way – as the Internet of ‘My’ things – that helps them experience the benefits of IoT in their context. Smart industrial solutions, enabling remote management and asset optimization that drive unprecedented business value. And mapping these solutions to specific cost and revenue benefits and thereby achieve competitive advantage. The benefits are unmistakable across industries such as energy & utilities, transportation & logistics, healthcare, minning and manufacturing. We have witnessed the achievement of as much as 20% enhancement in operational efficiencies in a recent project. That’s no small return on investment.
So, while the media spotlight is on the gizmos and hype value of IoT, we need a parallel focus on its impact on business and ROI. As long as this is clear, businesses will dig deep to draw the necessary resources to focus on the necessary collaborative effort and overcome any remaining roadblocks to build this amazing bridge to tomorrow.
Note: This article has originally been written for Economic times : http://bit.ly/1gtJYdJ